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Butter is booming, whole milk is back and dairy is surviving

Dietary trends come and go, but for four decades the dairy industry has been finding ways to keep consumption growing.

With Americans staying home more than usual because of the pandemic, and doing lots of baking and cooking to pass the time, this has been a banner time for butter.  

Land O’Lakes, the Minnesota-based dairy cooperative, expects to sell 275 million to 300 million pounds of the stuff this year — a 20% increase — as rising retail demand more than makes up for lost restaurant business.

Nationwide, according to the US Dept of Agriculture, butter production is up 6% over the first nine months of the year and is on track to top two billion pounds for the first time since 1943.

This boom is part of a longer-term comeback. On a per-capita basis, Americans eat far less butter than they did in the early decades of the 20th century. But they eat more than they did in the 1980s and 1990s.

After staving off competition from margarine with nearly a century of lobbying for margarine bans, taxes and colour restrictions, butter producers lost their regulatory advantages in the 1940s and 1950s and ceded a lot of market share to the cheaper spread — which had originally been derived from beef fat but was by then mainly made out of vegetable/seed oil.

As medical researchers began to link consumption of animal fats with heart disease in the 1950s and 1960s, margarine gained even more ground as a purportedly healthier alternative.

Those health claims were later mostly debunked, and the price difference between butter and margarine began to matter less as incomes rose and families shrank (food purchased for off-premises consumption accounted for more than 18% of consumer spending in the early 1950s and just 6% in 2019).

Butter also benefited from the emphasis on genuine ingredients accompanying the good-food revival that began in the 1960s (Julia Child certainly wasn’t going to use margarine). And let’s be honest, it tastes better. Corn oil, olive oil and other vegetable oils now play a much bigger role in American diets than they used to, so butter will probably never regain its central status of a century ago. But it’s not going away.

“It’s a survivor story,” says Peter Vitaliano, VP of economic policy and market research at the National Milk Producers Federation. 

The same goes for the dairy industry in general. It can seem awfully embattled from time to time, and for good reason. Giant, highly productive dairies have been driving lots of smaller farmers out of business. Competition from “milks” made of almonds, oats, soybeans and other plants has taken market share from the real thing and led to a dairy industry lobbying campaign reminiscent of the margarine wars of yore.

President Donald Trump’s trade policies caused problems too. Two big milk marketers, Borden Dairy Co. and Dean Foods Inc filed for bankruptcy in the past 12 months.

But the big picture for the industry since 1980 or so is of declining demand for its core product (milk, that is) being more than offset by rising sales of almost everything that can be made out of milk.

Even within milk sales there’s been an interesting shift lately, with whole milk outselling 2% milk for the first time in 15 years in 2018 and building on its lead in 2019, and skim milk sales drifting downward.

If you’re going to drink milk, and not smashed-up almonds mixed with water, then you might as well drink the milkiest kind of milk.

Whole milk happens to be the most profitable product for dairy farmers, as it’s basically just what comes out of the cow and thus doesn’t require them to share much revenue with processors. It also has benefited from the new eat-at-home normal of the pandemic, with sales up 4.1% through August (2% milk sales are up too, with skim and 1% down).

But on the whole, it is products made of milk that have kept the industry going. The butter revival is one aspect of this. The rise of yoghurt, which was close to nonexistent in the US before the 1970s, is another, even though it has faded a bit lately.

Bloomberg.com: For the full story read more HERE

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